(Business in Cameroon) –
On the seventh day of a military escalation in the Arabian-Persian Gulf, sparked by Israeli airstrikes and Iranian retaliation, global oil markets are on high alert. This places Cameroon in a delicate position, marked by both opportunity and vulnerability.
Oil prices surged more than 4% on Tuesday, June 17, 2025, pushing Brent crude to $76.45 a barrel. Analysts now speak of a security risk premium that could add as much as $10 to each barrel.
The price jump comes as the conflict, now in its first week, continues to unfold along one of the world’s most critical shipping routes, the Strait of Hormuz. This narrow passage handles between 20% and 30% of global oil shipments.
A Geopolitical Factor to Watch
For Cameroon, this geopolitical flare-up represents yet another external factor demanding close monitoring. The country produces crude oil, though output has declined to an officially stated 72,000 barrels per day. It remains a net importer of refined petroleum products since shutting down its domestic refinery in 2019. As with past global shocks, Cameroon now faces a familiar but paradoxical scenario. If international prices continue to rise, it could reap windfall revenues but also shoulder heavier costs.
On the upside, higher prices mean more income from crude exports, which the National Hydrocarbons Corporation (SNH) sells at discounts ranging from 30% to 50% below Brent. A $10-per-barrel increase could translate into an additional $5 to $7 per exported barrel, millions of dollars in extra revenue for the national treasury. On the downside, rising prices would inflate the cost of importing refined fuels, at a time when domestic consumption, as shown in 2024 data, is climbing.
Market Forecasts Clouded by Uncertainty
Given current conditions, major financial analysts present sharply diverging forecasts for 2025. JP Morgan remains the most bearish, projecting Brent at $66 per barrel for 2025 and $58 for 2026. Goldman Sachs, meanwhile, maintains a higher range of $70 to $85, with an average near $76. S&P Global points to growing energy demand from artificial intelligence development, as well as policy uncertainties under the Trump administration, as key drivers of volatility. These disparities underscore the increasing weight of geopolitical dynamics over traditional economic fundamentals in shaping oil markets.
The unfolding conflict in the Middle East is exacerbating this volatility. Analysts at Price Futures Group are already drawing parallels to the war in Ukraine, warning of a protracted standoff that could keep oil prices elevated for an extended period. The specter of a closure of the Strait of Hormuz, though seen as unlikely given the global stakes, looms large for market speculators.
Transmission Mechanisms
“For Cameroon’s economy, the ripple effects of oil shocks follow a well-defined timeline,” according to a 2015 study by the Bank of Central African States (BEAC), which has yet to be updated.
The study notes that public finances react within the first three months via shifts in export revenue. Sectoral adjustments, particularly in oil-related industries and services, tend to occur between three and twelve months. Full inflationary effects only unfold after 25 months, offering authorities a narrow window to cushion the impact on consumers.
This staggered response is partly due to Cameroon’s relatively diversified economic structure, in contrast with its more oil-dependent CEMAC neighbors. Yet with petroleum still accounting for 41% of export earnings, the country remains vulnerable to external shocks, especially in the absence of robust budget-smoothing mechanisms, which exacerbates fiscal volatility.
The recent emergence of a supply deal with Nigeria’s Dangote refinery, marked by a first delivery of 60,000 tonnes in December 2024, offers a partial buffer. Diversifying supply sources could ease import costs, thanks to lower transport expenses and Dangote’s competitive pricing, and reduce exposure to global refining margin swings, while boosting regional energy integration.
A Policy Dilemma
In the medium term, Cameroonian authorities may face a difficult choice. They must decide whether to reinstate fuel subsidies to shield consumers from prices they already consider too high, or pass on potential increases at the pump. Either path risks igniting social unrest, especially given the country’s fragile economy and the approach of a high-stakes presidential election.
This decision is all the more critical as economic diversification remains a work in progress. While favorable global cocoa prices have buoyed export earnings, oil still makes up 41% of foreign currency revenues. Investment in transport corridors linking the agriculturally rich Northwest to other regions is also undermined by latent, though contained, instability. Meanwhile, public policy capacity continues to be weighed down by debt repayments, much of which financed development projects whose returns are still uncertain. Urban crossing of Bamenda:
